US-China solar pact holds big potential: Analyst

SunEdison Inc, a leading US-based solar developer, has signed its second joint-venture project in China, and an analyst sees the deal as a way for the company to move into the world’s “largest downstream solar market.”

Michael Barker, a senior analyst with NPD Solarbuzz, an online solar market research and analysis firm, said the joint venture between SunEdison and JIC Capital, a Chinese asset management firm, “is a project development deal”.

“It’s specifically focused on building solar power projects in China,” Barker said Tuesday in an interview with China Daily. “[China] is the largest single country market in the world for solar photovoltaic (PV) power projects, so it’s an important market for companies that are working to be exposed to multiple geographies.”

PV is the method of generating electricity by converting solar radiation into direct electric currents.

On Oct 16, SunEdison announced its most recent JV deal with a Chinese partner in a press release. The pact calls for the development and construction of up to 1 gigawatt (GW) of “utility-scale solar photovoltaic projects” in China over the next three years.

SunEdison’s deal with JIC Capital features a total investment of $220 million, according to a report from Bloomberg News.

The partnership will provide both companies a strategic ally in the global solar industry market, according to company executives.

Ahmad Chatila, president and CEO of SunEdison, said in a statement: “This historic joint venture is a great step forward for SunEdison … to deliver clean, cost-effective solar energy to the people of China.”

Zhang Jianping, chairman of JIC Capital, said his company sees the collaboration with SunEdison as a chance to learn from the respective expertise brought to the table by both sides.

“Capital contributions will accelerate the growth of the solar market in China, and China’s solar PV industry requires international know-how to improve,” Zhang said in a press release. “This collaboration brings us opportunities to combine capital and industry, to form a focused industrial investment platform for long-term operations.”

SunEdison, the US solar technology company, is also in talks with another Chinese group about a potential deal to invest as much as $2 billion to build a polysilicon plant in China. Polysilicon is the leading material used in the production of solar cells.

Chatila, SunEdison’s chief executive, told Bloomberg News that if the proposed plant were located in China it would have “the lowest cost”.

In June, SunEdison announced a separate partnership with the Huantai Group, another Chinese solar firm, to co-develop nearly 1.7 GW of solar projects over the next five years.

An August report from Hanergy Holding Group Ltd, a Beijing-based clean-energy company, shows that global renewable energy financing reached $253 billion in 2013.

Asia-Pacific region flows investments in clean energy have maintained “continuous growth” since 2011. Total investments from the area reached $119.61 billion in 2013, an increase of 9.8 percent year-over-year.

“The increase was mainly driven by tremendous growth of photovoltaic power installed capacity in China and Japan,” the report said. “In terms of the global ranking, China topped the world with a financing amount of $61.44 billion, overtaking the US by nearly 27 percent, then followed by Japan and Germany.”

Chatila, SunEdison’s president, said in the interview with Bloomberg: “China will build the most power infrastructure in the next 20 years. What’s limiting companies like us in getting into China is getting project financing, and now that’s available.”

Barker, with NPD Solarbuzz, said: “It’s a plan with a sizable amount of total solar power to be developed over the course of the period. So being able to expand to multiple geographies is very important for large-scale companies looking for a long-term project pipeline.”

“The way that power is being purchased still makes [China] a very attractive destination market,” he said. “No 1, the deal offers opportunities to install products and power plants. And No 2, it also helps diversify some of the long-term pipeline [for SunEdison] so there’s less risk of policy shock.”

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